Markets May Rise Sharply on German Ruling

LONDON -- The Dow Jones Industrial Average (INDEX: ^DJI  ) and the S&P 500 (INDEX: ^GSPC  ) are poised to open sharply higher this morning, according to futures markets, after the German Constitutional Court ruled that the European Stability Mechanism was legal.

As expected, the ruling included some conditions, limiting Germany's liability to 190 billion euros and requiring any further changes to be approved by the German Bundestag (parliament). European markets reacted immediately, and U.S. markets are expected to follow, with Dow and S&P futures up by more than 0.5% as of 7 a.m. EDT.

In domestic news, August's import price index and July's wholesale inventories are due to be published this morning, with both expected to show an increase, reversing the previous month's declines. Shares in Apple (Nasdaq: AAPL  ) could move sharply today. This afternoon, the tech giant is expected to unveil the iPhone 5, which is expected to include 4G functionality and a 4-inch screen. Facebook (Nasdaq: FB  ) shares could also rise sharply after gaining more than 3% in after-hours trading last night following a speech by CEO Mark Zuckerberg that boosted investors' confidence in Facebook's mobile progress.

Finally, today sees the start of the monthly Federal Open Markets Committee meeting on interest rate policy. No announcement is likely until tomorrow, when markets will be watching closely and hoping for a further round of quantitative easing.

European markets
European markets were quiet this morning before moving decisively upward following the German court ruling that the ESM is legal. At 7 a.m. EDT, the DAX was up by 0.8%, the CAC was up by 0.5%, the FTSE MIB was up by 1.1%, and the IBEX was up by 0.8%.

In London, reaction was more muted but still positive, with the FTSE 100 (INDEX: ^FTSE  ) up by 0.1% at 7 a.m. EDT. The U.K.'s bailed-out banks were the biggest gainers; both Lloyds Banking Group and Royal Bank of Scotland were up by more than 3% at the end of the morning session. While most mining shares also made gains, Anglo American fell on reports of disturbances at its South African platinum mines.

Billionaire investor Warren Buffett rarely invests outside the U.S. However, he did recently invest $1 billion in a well-known British blue chip brand, expanding his stake in the company to more than 5%. This famous British name has global expansion potential -- and you can discover the identity of the company and the price he paid in this special exclusive report. Best of all, the report is free -- so download it today while it's still available.

 Are you looking to profit from this uncertain economy? "10 Steps To Making A Million In The Market" is The Motley Fool's latest report. We urge you to read it today -- your wealth could be transformed. Click here now to request your free, no-obligation copy. The Motley Fool is helping Britain invest. Better.

Further investment opportunities:

Roland Head has no shares in any of the companies mentioned in this article. The Motley Fool owns shares of Facebook and Apple. Motley Fool newsletter services have recommended buying shares of Apple and Facebook. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. The Motley Fool has a disclosure policy.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


Read/Post Comments (0) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2013964, ~/Articles/ArticleHandler.aspx, 12/18/2014 9:32:23 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement